HYDERABAD: Sumit Sen Reddy, Director of Prajay Engineers, is optimistic about the real estate prospects in the city. The situation, he says, has improved in the last six months but points out that impact fee must go if the sector has to regain its lost glory
What is your assessment of the residential market in Hyderabad?
The situation is not as bad as it was about six months back. The industry picked up in March and April. In May, there has not been much movement since a lot of people are on vacation. But that is not very alarming as it happens every year. A lot of projects have been announced and I think, by July, the market should pick up once again. All doubts and apprehensions that people had about the residential market in Hyderabad are slowly going away.
With several new projects being launched, do you feel consumers prefer new flats, instead of old ones, even if the latter are in a better location?
Yes, definitely! People would rather buy a new flat since they can decide right from scratch as to how they want it to be. Whether it is vaasthu or ventilation, or any other small thing, the consumer has the right to change it as per his preference and convenience. This is mainly why people opt for new projects.
Does this mean location no longer matters?
Not at all. Location is still a very important criteria for prospective buyers in Hyderabad. People prefer to invest somewhere closer to their workplace and though the Metro Rail could slightly improve things, many of those who spend around `30-40 lakh to purchase an apartment in the city have vehicles of their own. So it may not make such an impact. Currently 60 to 70 per cent purchases are going on in Madhapur and Gachibowli as people in the IT sector are looking to stay closer to their workplace. I expect this trend to continue, even after the Metro Rail comes chugging.
How about the commercial sector in the city? Has it shown signs of progress?
Unfortunately, the commercial sector is not doing very well at the moment. This is because of an overdose of supply. The inventory is full and there is nothing much that anyone can do at this stage.
Developers are keen to tap into the NRI market. Do you feel this could boost the overall residential sector?
Yes, I think so. A lot of NRIs are investing in residential projects in Hyderabad. We have seen many of them, particularly those hailing from Telangana, who are keen to develop Hyderabad into a global city. This has resulted in an increase in NRI purchases in the city.
As developers, what are the challenges you continue to face?
Apart from multiple taxes, the biggest challenge at the moment in Hyderabad for apartments is that the impact fees is very high. Impact fees basically means, there is a fixed fee structure for a five-storeyed building. Now if you have to build a project consisting of more than five floors, you have to pay an impact fee for every additional floor. This has put a lot of burden on the developers which is transferred to the end-consumer. Fortunately, CM K Chandrasekhar Rao recently announced that the impact fee concept will be scrapped.